Social and Behavioral Sciences Commons^™

Relations Of Production And Modes Of Surplus Extraction In India, Amit Basole, Deepankar Basu

Economics Department Working Paper Series

This paper uses aggregate-level data, as well as case-studies, to trace out the evolution of some key structural features of the Indian economy, relating both to the agricultural and the informal industrial sector. These aggregate trends are used to infer: (a) the dominant relations of production under which the vast majority of the Indian working people labour, and (b) the predominant ways in which the surplus labour of the direct producers is appropriated by the dominant classes. This summary account is meant to inform and link up with on-going attempts at radically restructuring Indian society.

The Exchange Rate, Diversification, And Distribution In A Modified Ricardian Model With A Continuum Of Goods, Arslan Ramzi

Economics Department Working Paper Series

Several recent empirical and theoretical studies have revived interest in the relationship between the level of the exchange rate and economic development. This paper develops a dynamic model based on the Ricardian framework with a continuum of goods to consider the issue from a somewhat different perspective. In the short run, a devaluation can boost profits in spite of real wage rigidity. Moreover, the resulting diversification can offset the negative consequences for the trade balance of higher employment and profitability at home. Over the longer run, and in the presence of learning-by-accumulation, the initial boost to profits and investment induced …

Exploitation And Profits: A General Axiomatic Approach In Convex Economies With Heterogeneous Agents, Roberto Veneziani, Naoki Yoshihara

Economics Department Working Paper Series

This paper provides an innovative axiomatic analysis of the notion of exploitation as the unequal exchange of labour, focusing on the relation between exploitation and profits. General convex economies with heterogeneous agents endowed with unequal amounts of physical and human capital are considered. An axiomatic characterisation of the class of definitions that preserve the Fundamental Marxian Theorem (FMT) in this general context is derived. It is shown that none of the main received definitions preserves the FMT. Instead, a definition related to the `New Interpretation' (Dumenil, 1980; Foley, 1982) is presented which preserves the FMT and allows one to generalise …

The Great Detour, Peter Skott

Economics Department Working Paper Series

This note comments on the state of macroeconomics, arguing that the ‘micro founded’ macro that developed after 1970s has been a wasteful detour. The paper will appear in a symposium in Homo Oeconomicus, vol. 27 (2), 2010, on the crisis and the response from the British Academy to the questions from the British Queen.

Labor Productivity And The Law Of Decreasing Labor Content, Peter Flaschel, Reiner Franke, Roberto Veneziani

Economics Department Working Paper Series

This paper analyzes labor productivity and the law of decreasing labor content (LDLC) originally formulated by Farjoun and Machover (1983). First, it is shown that the standard measures of labor productivity may be rather misleading, owing to their emphasis on monetary aggregates. Instead, the conventional classical-Marxian labor values provide the theoretically and empirically sound measures of labor productivity. The notion of labor content and the LDLC are therefore central in order to understand the dynamics of capitalist economies. Second, some rigorous theoretical relations between different forms of profit-driven technical change and productivity are derived in a general input-output framework with …

An Empirical Evaluation Of Three Post Keynesian Models, Peter Skott, Ben Zipperer

Economics Department Working Paper Series

Structuralist and post Keynesian models differ in their assumptions about firms’ investment behavior and pricing/output decisions. This paper compares three benchmark models: Kaleckian, Robinsonian and Kaldorian. We analyze the implications of these models for the steady growth path and the cyclical properties of the economy, and evaluate the consistency of the theoretical predictions with empirical evidence for the US. Our regression results and the stylized cyclical pattern of key variables are consistent with the Kaldorian model. The Kaleckian investment function and the Robinsonian pricing behavior find no support in the data.

Intergenerational Justice In The Hobbesian State Of Nature, Paola Manzini, Marco Mariotti, Roberto Veneziani

Economics Department Working Paper Series

We analyse the issue of justice in the allocation of resources across generations. Our starting point is that if all generations have a claim to natural resources, then each generation should be entitled to exercise veto power on the unpalatable choices of the other generations. We analyse this situation as one of bargaining à la Rubinstein, Safra and Thomson [15], which incorporates a notion of justice as mutual advantage, rather than justice as impartiality, as in the Kantian-Rawlsian tradition. Our framework captures some key aspects of the interaction between isolated agents in a Hobbesian state of nature, in which agents …

Labor Heterogeneity, Inequality And Institutional Change, Peter Skott

Economics Department Working Paper Series

US earnings inequality has increased dramatically since the 1970s, and the prospect of a reversal depends on what caused the trend. The standard explanation emphasizes skill-biased technical change. This paper briefly considers some aggregation issues and then proceeds to outline two alternative perspectives .power biased technical change and the effects of induced mismatch in the labor market .and their implications.

A Classical-Marxian Model Of Education, Growth And Distribution, Amitava Krishna Dutt, Roberto Veneziani

Economics Department Working Paper Series

This paper develops a classical-Marxian macroeconomic model to examine the growth and distributional consequences of education. First, the role of education in skill formation is considered and it is shown that an expansion in education will promote growth and have beneficial distributional effects within the working class, but it will redistribute income from workers to capitalists. Second, the model is extended analyze the broader political economic consequences of education on class relations and class conflict. The model suggests the importance of a progressive type of education rather than one which weakens the power workers, for it allows for equitable growth …

Route Choice Behavior In Risky Networks With Real-Time Information, Michael D. Razo

Masters Theses 1911 - February 2014

This research investigates route choice behavior in networks with risky travel times and real-time information. A stated preference survey is conducted in which subjects use a PC-based interactive maps to choose routes link-by-link in various scenarios. The scenarios include two types of maps: the first presenting a choice between one stochastic route and one deterministic route, and the second with real-time information and an available detour. The first type measures the basic risk attitude of the subject. The second type allows for strategic planning, and measures the effect of this opportunity on subjects' choice behavior.

Results from each subject are …

Bolivia's Coca Headache: The Agroyungas Program, Inflation, Campesinos, Coca And Capitalism In Bolivia, John D. Roberts

Masters Theses 1911 - February 2014

Bolivia in the 1980s was wracked by monetary inflation approaching levels of the German Weimar Republic. Immediately following this time of great financial crisis in Bolivia, the U.N. founded a project through the U.N.D.P. to encourage peasant farmers in Bolivia to switch from growing coca (the plant used manufacture cocaine) to growing other cash crops for market. This crop substitution and development program, called the Agroyungas Project, lasted from 1985 to 1991 and is the focus of this study. While many U.N. pundits and journalists considered the program’s initial small successes promising, it has been considered since its conclusion to …

Human Capital In The City: Exploring The Relationship Between Skill And Productivity In Us Metropolitan Areas, Ryan Wallace

Masters Theses 1911 - February 2014

In economics, new growth theory suggests that knowledge creation and innovation are key drivers of growth. As a result, the ‘new economy’ is increasingly reliant upon the knowledge, skills, and abilities embodied in its workforce, also known as human capital, that facilitate the stimulation and generation of new ideas (Romer 1986, 1990 and Lucas 1988). This research contributes to the understanding of the relationship between stocks of human capital and economic output. I construct metrics to measure concentrations of basic worker skills using the Bureau of Labor Statistics Occupational Information Network (O*NET) and employment estimates for 353 US metropolitan areas. …

Property Rights Reform And Development: A Critique Of The Cross-National Regression Literature, Osvaldo Gómez Martínez, Lawrence King

PERI Working Papers

The legal protection of property rights is increasingly viewed as a crucial, if not the crucial, condition for economic growth and pro-poor development. Empirical support is generally based on cross-national correlations between measures of secure property rights and good development outcomes in the long-run. However, whether these associations hold in the short- and medium-run has, to our knowledge, not been studied. In this paper, we evaluate the relationship between the protection of property rights and growth using three property rights indices from the Heritage Foundation, Fraser Institute and World Economic Forum covering the experience of 162 countries between 1995 and …

Is There A Case For Formal Inflation Targeting In Sub-Saharan Africa?, James Heintz, Léonce Ndikumana

PERI Working Papers

This paper examines the question of whether inflation targeting monetary policy is an appropriate framework for sub-Saharan African countries. The paper presents an overview of inflation targeting, reviews the justification for the regime, and summarizes some major critiques. Monetary policy responses to inflation depend on the source of inflationary pressures. Therefore, the determinants of inflation in African countries are investigated, using dynamic panel data, and the implications for inflation targeting are discussed. These issues are examined in greater detail for the two African countries which have formally adopted inflation targeting, South Africa and Ghana. The analysis is placed in the …

Capital Controls And 21st Century Financial Crises: Evidence From Colombia And Thailand, Bruno Coelho, Kevin P. Gallagher

PERI Working Papers

In the run up to the financial crisis of 2007-2009 many developing nations fell victim to massive inflows of capital, capital that their financial systems found difficult to absorb. One of a number of policy options to respond to such inflows is unremunerated reserve requirements (URR). Two countries, Colombia and Thailand, deployed URR in the second half of the decade. This paper analyses the extent to which those URRs were successful in reducing the overall level and composition of capital inflows, reducing exchange rate appreciation and volatility, stemming asset bubbles, and granting more independence for monetary policy. We find that …

The International Circuit Of Key Currencies And The Global Crisis: Is There Scope For Reform?, Lilia Costabile

PERI Working Papers

The causes of the global crisis are still hotly debated among economists, and for a good reason: the remedy crucially depends upon the diagnosis, and we still need a recipe to exit this crisis, which, in spite of early optimism, is still plaguing the world and Europe, with its sequel of financial disorder, sovereign risks and, above all, mass unemployment . Even more importantly, we need to devise methods by which global crises may be avoided in the future. This paper contributes to this debate by exploring a possible causal link running from our international monetary system to global imbalances, …

The Troubling Economics And Politics Of Paying Interest On Bank Reserves: A Critique Of The Federal Reserve’S Exit Strategy, Thomas I. Palley

PERI Working Papers

The Federal Reserve has recently activated its newly acquired powers to pay interest on reserves of depository institutions. The Fed maintains its new policy increases economic efficiency and intends it to play a lead role in the exit from quantitative easing. This paper argues it is a bad policy that (1) has a deflationary bias; (2) is costly to taxpayers and that cost will increase as normal conditions return; and (3) establishes institutional lock-in that obstructs desirable changes to regulatory policy. The paper recommends repealing the Fed’s power to pay interest on bank reserves. Second, the Fed should repeal regulation …

Economic, Demographic And Housing Trends In 495/Metrowest Region, Henry C. Renski, Kim Mckee

Center for Economic Development Technical Reports

No abstract provided.

Using School-Age Populations To Identify Hard-To- Count Populations: A Report To The Secretary Of The Commonwealth, Henry C. Renski, Susan Strate, John Gaviglio, Sonya Smith, Bill Proulx

Center for Economic Development Technical Reports

No abstract provided.

Son Targeting Fertility Behavior: Some Consequences And Determinants, Robert De Jong, Deepankar Basu

Economics Department Faculty Publications Series

This article draws out some implications of son targeting fertility behavior and studies its determinants. We demonstrate that such behavior has two notable implications at the aggregate level:(a) girls have a larger number of siblings (sibling effect), and (b) girls are born at relatively earlier parities within families (birth-order effect). Empirically testing for these effects, we find that both are present in many countries in South Asia, Southeast Asia, and North Africa but are absent in the countries of sub-Saharan Africa. Using maximum likelihood estimation, we study the effect of covariates on son targeting fertility behavior in India, a country …

A Concise History Of Exchange Rate Regimes In Latin America, Roberto Frenkel, Martin Rapetti

Economics Department Working Paper Series

The paper analyzes exchange rate regimes implemented by the major Latin American countries since the Second World War, with special attention on the period of the second globalization process beginning in the 1970s. The analysis follows a historical narrative aiming to provide an understanding of the domestic and external circumstances in which various regimes were adopted. A simple conceptual framework is developed in order to emphasize how the exchange rate regime may affect key nominal and real variables in a small open economy. After an overview of the main trends followed by the major countries in the region over the …

Employment And Distribution Effects Of The Minimum Wage, Fabian Slonimczyk, Peter Skott

Economics Department Working Paper Series

This paper analyzes the effects of the minimum wage on wage inequality, relative employment and over-education. Using an effciency wage model we show that over-education can be generated endogenously and that an increase in the minimum wage can raise both total and low-skill employment, and produce a fall in inequality. Evidence from the US suggests that these theoretical results are empirically relevant. The over-education rate has been increasing and our regression analysis suggests that the decrease in the minimum wage may have led to a deterioration of the employment and relative wage of low-skill workers.

Is There A Tendency For The Rate Of Profit To Fall? Econometric Evidence For The U.S. Economy, 1948-2007, Deepankar Basu, Panayiotis T. Manolakos

Economics Department Working Paper Series

The law of the tendential fall in the rate of profit has been at the center of theoretical and empirical debates within Marxian political economy ever since the publication of Volume III of Capital. An important limitation of this literature is the absence of a comprehensive econometric analysis of the behaviour of the rate of profit. In this paper, we attempt to fill this lacuna in two ways. First, we investigate the time series properties of the profit rate series. The evidence suggests that the rate of profit behaves like a random walk and exhibits "long waves" interestingly correlated with …

Falling Into The Liquidity Trap: Notes On The Global Economic Crisis, Thomas R. Michl

PERI Working Papers

This paper examines the underlying structural imbalances leading up to the Great Recession of 2007-2009 from the vantage point of Hyman Minsky’s theory of the liquidity trap. The traditional approach to the liquidity trap focuses on the zero interest rate boundary while Minsky’s theory focuses on three conditions that make investment spending unresponsive to monetary policy: low underlying ex post profitability of capital, weak expectations about future profitability, and uncertainty about prospective yields. The paper structures an empirical investigation of profitability and accumulation around these three factors. The Great Recession was preceded by an unbalanced recovery in which residential investment …

Generating Jobs Through State Employer Tax Credits: Is There A Better Way?, Jeff Thompson, Heidi Garrett-Peltier

PERI Working Papers

The Governors of Massachusetts, Connecticut, and several other states have recently proposed employer tax credits as measures to fight high unemployment in their states. Such policies are also being consid-ered at the federal level. The authors find that such policies, in fact, do little to increase aggregate de-mand, and instead only modestly reduce the after-tax cost of labor in an economy with high unemployment, falling wages, and weak demand They suggest a more effective approach to creating jobs in the states: increasing spending in labor-intensive sectors and programs that are matched by federal funds, such as Medicaid. These expenditures would …

Economic Inequality And Environmental Quality: Evidence Of Pollution Shifting In Russia, Marina S. Vornovytskyy., James K. Boyce

PERI Working Papers

This paper utilizes the Russian Statistical Agency's data on air pollution in Russia to analyze the impact of economic inequalities among Russia's regions on environmental degradation. Controlling for the absolute level of income, we find that regions with lower incomes relative to those of neighboring regions have more uncontrolled air pollution. Differences in uncontrolled pollution do not appear to be attributable to differences in spending on pollution control, suggesting that facility siting provides the dominant explanation. In addition, we find that greater within-region inequalities in income and in the provision of public goods are associated with greater uncontrolled air pollution.

Cyclical Patterns Of Employment, Utilization And Profitability, Ben Zipperer, Peter Skott

Economics Department Working Paper Series

The interaction between income distribution, accumulation, employment and the utilization of capital is central to macroeconomic models in the `heterodox' tradition. This paper examines the stylized pattern of these variables using US data for the period after 1948. We look at the trends and cycles in individual time series and examine the bivariate cycical patterns among the variables.